When China Ludao Technology Company Limited (SEHK:2023) released its most recent earnings update (30 June 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how China Ludao Technology performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see 2023 has performed.
Did 2023 beat its long-term earnings growth trend and its industry?
2023's trailing twelve-month earnings (from 30 June 2019) of CN¥24m has increased by 7.1% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 11%, indicating the rate at which 2023 is growing has slowed down. What could be happening here? Well, let’s take a look at what’s going on with margins and whether the entire industry is experiencing the hit as well.
In terms of returns from investment, China Ludao Technology has fallen short of achieving a 20% return on equity (ROE), recording 5.9% instead. Furthermore, its return on assets (ROA) of 5.4% is below the HK Household Products industry of 7.1%, indicating China Ludao Technology's are utilized less efficiently. However, its return on capital (ROC), which also accounts for China Ludao Technology’s debt level, has increased over the past 3 years from 1.6% to 11%.
What does this mean?
Though China Ludao Technology's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research China Ludao Technology to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 2023’s future growth? Take a look at our free research report of analyst consensus for 2023’s outlook.
- Financial Health: Are 2023’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.